Toronto, November 13, 2008 - Aon Consulting Canada released the results of its 2008 Retirement Pulse Survey today. Conducted late last month, the survey tried to gauge the impact of the recent financial turmoil on defined benefit and defined contribution plans in Canada and further explored how plan sponsors are reacting to the situation.

The survey covered 149 plan sponsors, with 100 responding to the DC questions and 81 responding to the DB questions. The survey found that sponsors are, for the most part, dealing proactively with the recent turmoil in the markets and are taking their fiduciary responsibilities seriously. "Perhaps this is an indication that the emphasis in the past five years on governance is having a positive effect on the management of pension plans. That said, there continues to be room for improvement," noted Barry Gros, Vice President, Aon Consulting Canada Retirement Strategies.

"Only recently has the coverage of the current financial turmoil turned to pension plans. Yet anecdotal evidence leads us to believe that Canadian plan sponsors are very concerned with what yet another bad year of investment returns will do to their plans. For DB plans, they’re worried about funding requirements; for DC plans, they’re worried about their employees' ability to retire," Barry added.

Sponsors are dealing proactively with the recent turmoil in the markets and are taking their fiduciary responsibilities seriously

As evidence of a lack of complacency, 67% of the DB respondents indicated that they would participate in lobbying efforts that Aon might initiate. The example given in the survey was to convince pension regulatory authorities to consider introducing some form of relief for the significantly increased solvency funding that will surely result from the current turmoil.

Defined Contribution Questions

Companies overwhelmingly responded that they have reviewed their DC plan's core investment fund line-up in response to the turmoil. Almost half have conducted risk evaluation of their exposure to securities of financial firms that have experienced significant duress. Respondents have also identified strategies to encourage continued plan participation and calm the fears fuelled by plunging markets. 

• 78% have reviewed their DC plan's core offerings to ensure that they have sufficient diversification. Just over a quarter of this group (26%) have sought input from an objective advisor. Only 1% expressed concerns about the exposure of fixed interest accounts to deterioration of the general accounts of the vendor organization. 21% have not reviewed their current offering, and have relied on investment recommendations from their vendor.
• 49% have evaluated the risk exposure associated with managers that maintained a high level of exposure to securities of financial firms that have experienced significant duress. The other 51% have relied on recommendations from their vendors.
• Sponsors have deployed a number of tactics in communicating with their plan participants in these trying times, with the leading tactics being:
  •  Emphasizing the importance of asset allocation and maintaining a well diversified portfolio (49%).
  • Openly and consistently communicating through information provided by third parties (44%).
  • Suggesting to participants that they consider seeking professional investment advice (39%).
  • Providing professional investment advice through the plan (20%).
  • Confirming their fiduciary oversight and governance and their commitment to monitor the investments and act in the best interest of the participants (32%).

Defined Benefits Questions

Firms were asked what impact they expected the financial turmoil to have on their DB plan(s)' cash funding and pension expense reporting bases, and whether they have already investigated or implemented asset and liability techniques to minimize volatility risk.

Their replies were:

• 62% have reviewed the impact on their organization's pension costs resulting from the current economic turmoil, while a further 33% intend to review the impact but aren't there yet.
• 36% have either investigated or intend to investigate asset and liability techniques that minimize volatility risk. Of those who investigated such techniques, more than half (55%) have either implemented or are likely to implement such techniques. The leading techniques were:
  • Lengthening the bond duration (100%).
  • Changing the plan design or freezing the plan (81%).
  • Increasing fixed income allocations (63%).

For further information on this survey, please contact:
Barry Gros Thierry Chamberland
Vice President, Retirement Strategies Vice President, Retirement Strategies
Aon Consulting Aon Consulting
Tel: 416.542.5544 Tel: 514.845.6231
barry.gros@aon.ca thierry.chamberland@aon.ca

About Aon Consulting
Aon Consulting Worldwide is among the top global human capital consulting firms, with 2007 revenues of US$1.352 billion and more than 6,000 professionals in 117 offices worldwide. Aon Consulting is shaping the workplace of the future through benefits, talent management and rewards strategies and solutions. Aon Consulting was named the best employee benefit consulting firm by the readers of Business Insurance magazine in 2006, 2007 and 2008.  For more information on Aon, please visit http://aon.mediaroom.com.

About Aon
Aon Corporation (NYSE: AOC) is the leading global provider of risk management services, insurance and reinsurance brokerage, and human capital consulting. Through its 36,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Our industry-leading global resources, technical expertise and industry knowledge are delivered locally through more than 500 offices in more than 120 countries. Aon was named the world's best broker by Euromoney magazine's 2008 Insurance Survey. In 2008, Aon ranked highest on the Business Insurance ranking of the world's largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues. Aon also was ranked by A.M. Best as the number one insurance broker based on brokerage revenues in 2007 and 2008, and was voted best insurance intermediary, best reinsurance intermediary, and best employee benefits consulting firm in 2007 and 2008 by the readers of Business Insurance. Sign up to receive Aon news alerts by email or RSS feed at: http://aon.mediaroom.com/index.php?s=58.